Savannah Factory Applies Manufacturing Overhead Based on Direct Labor Cost

question 76

Multiple Choice

Savannah Factory applies manufacturing overhead based on direct labor cost. Information concerning manufacturing overhead and labor for August follows: $$\begin{array} { l r r } & \text { Estimated } & \text { Actual } \\\text { Overhead cost } & \$ 174,000 & \$ 171,100 \\\text { Direct labor hours } & 5,800 & 5,900 \\\text { Direct labor cost } & \$ 87,000 & \$ 89,975\end{array}$$ How much overhead should be applied in total during August?

• A) $179,950
• B) $174,000
• C) $177,000
• D) $171,100

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Definitions:

Test Statistic

A statistic calculated from sample data, used to determine whether to reject the null hypothesis.

Coin

A flat, typically round piece of metal with an official stamp, used as money.

Heads

One of the two possible outcomes when flipping a standard coin, the other being tails.

Chi-Square Distribution

A statistical distribution that is used to describe the distribution of a sum of the squares of k independent standard normal random variables, useful in hypothesis testing and constructing confidence intervals.